It’s the issue that has rocketed to the top of the charts: inflation is back.
I would not have written this even a week ago, but I now think that Pres. Joe Biden’s Build Back Better plan should be scaled way back from its current $1.75 trillion iteration. Inflation is now the biggest issue threatening Biden’s Democratic majorities in Congress. Things were already looking grim for his party, but there was a slim chance that, if the economy got back on track and supply chains got straightened out in time, maybe the Dems could defy political gravity. With this week’s inflation numbers (the worst since 1990) getting it under control has to now become the new priority.
Some of the issue is, in fact, the supply chain. But some of it is due to the over-large $1.9 trillion stimulus package passed earlier this year. I opined here more than once that I thought it was unnecessarily large, but the hard-left became fixated on the $1.9 trillion price tag, as if anything less would leave children selling matches and apples in the streets.
Now, we’re paying the price for the over-spending, literally. And it’s not just me saying so. Jason Furman, an economic advisor to Pres. Barack Obama, thinks we went too far. Here’s an excerpt from an Associated Press story from this morning:
Furman suggested, though, that misguided policy played a role, too. Policymakers were so intent on staving off an economic collapse that they “systematically underestimated inflation,” he said. “They poured kerosene on the fire.”
A flood of government spending — including President Joe Biden’s $1.9 trillion coronavirus relief package, with its $1,400 checks to most households in March — overstimulated the economy, Furman said.
“Inflation is a lot higher in the United States than it is in Europe,” he noted. “Europe is going through the same supply shocks as the United States is, the same supply chain issues. But they didn’t do nearly as much stimulus.”
(My emphasis added.)
So, if that’s the case, do you really want to add another bucket of kerosene right now?
By scaling way back, Democrats could accomplish another important political goal: clarity. Polls show that few Americans know anything about their bill beyond its big price tag. It was a mistake from the start to toss so much stuff into it. By teasing out just a few things, voters would know what they were getting, not just what it will cost.
My candidate for the One Thing, if it had to come down to that, would be to make the child tax credit permanent. This provision, which was part of that stimulus bill, is projected to cut childhood poverty in half. And it’s a tax cut, not an increase. And making it permanent won’t make inflation any worse because it’s already in place. It’s just scheduled to expire after next year.
Look, I’ve written several times that I supported everything in the original $3.5 trillion Biden plan. I do. But it’s important to be realistic about what you can get past Joe Manchin and the moderates. And, now with these inflation numbers, it’s important to readjust to rapidly changing political reality yet again.
Right now small has become beautiful.
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